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National Income and Price Determination Flashcards | StudBud
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National Income and Price Determination
National Income and Price Determination
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macroeconomics unit 3
Flashcards
20 cards
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Practice quiz
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Questions
20
Answers
1
Automatic stabilizers include all of the following EXCEPT
the federal income tax.
national defense spending.
unemployment compensation payments.
welfare payments such as food stamps.
2
Sticky nominal wages and prices in the short run cause the aggregate supply curve to
shift to the left
slope upward
shift to the right
slope downward
3
This is a picture of
a recessionary gap
stagflation
reduced spending
an inflationary gap
4
Which of the following will shift the SRAS curve?
a change in productivity
all of the above
a change in commodity prices
a change in nominal wages
5
If the marginal propensity to consume is 0.8, the spending multiplier is
0.80
1.25
5.00
4.00
6
Which of the following is true about the long run aggregate supply curve?
It is upward sloping
it is horizontal
It is the result of nominal wages being fully flexible
It is the result of sticky prices
7
Which of the following is an example of a negative supply shock?
production costs decrease
information technologies lead to productivity growth
world oil supplies are disrupted and oil prices rise
govt runs a budget deficit
8
The national debt is
The amount by which expenditures exceed revenues
The amount by which revenues fall short of projections
The amount by which revenues exceed expenditures
The total amount owed by the federal government
9
Which of the following will occur if the federal government reduces spending?
aggregate demand will decrease
aggregate supply will decrease
aggregate demand will increase
aggregate supply will increase
10
As the price level rises on the aggregate demand curve, what happens to net exports
it stays the same
it increases
it shifts the curve to the right
it decreases
11
If MPS is .25 and the govt increases spending by $1 Billion, how much does the economy grow?
$250 million
$25 billion
$750 million
$4 billion
12
Which type of policy can be used to address a decrease in GDP that's below potential output?
inflationary
expansionary
contractionary
recessionary
13
Added together the MPC and MPS always add up to
0
1
10
-1
14
What kind of effect does a change in gov spending have on GDP in comparison to change in taxes
a smaller effect
a larger effect
15
If the NRU is 5%, what do points A and B represent on the Phillips Curve?
A is the result of AS shift and B is result of AD shift
A is a recessionary gap and B is an inflationary gap
A is an inflationary gap and B is a recessionary gap
A is equilibrium @ full employment and B is inflationary gap
16
The collapse of wealth/consumer confidence that caused the Great Depression is an ex. of
a negative supply shock
a positive supply shock
a positive demand shock
a negative demand shock
17
What is the father of Keynesian macroeconomic theory, John Keynes', middle name?
Milton
Maynard
Mayton
Maybury
18
If potential output is equal to aggregate output, which of the following is true?
the economy is experiencing inflation
the economy is in long run equilbrium
nominal wages are sticky
the economy is experiencing cyclical unemployment
19
Which of the following policies will shift the aggregate demand curve to the left?
increase in government transfers
decrease in govt purchases of goods and services
decrease in interest rates
decrease in taxes
20
The tax multiplier
has a greater effect on economy than the spending multiplier
is always one less than the spending multiplier
is always one more than the spending multiplier
is equal to the spending multiplier
